Andhra HC (Pre-Telangana)
Mica Trading Corporation Of India Ltd. vs State Of Andhra Pradesh on 28 August, 1995
Equivalent citations: [1996]100STC142(AP)
Author: V. Rajagopala Reddy
Bench: V. Rajagopala Reddy
JUDGMENT S. Parvatha Rag, J.
1. These eight tax revision cases are preferred by the assessee, i.e., Mica Trading Corporation of India Limited, Gudur, and relate to the assessment years 1976-77 to 1983-84. They all arise under the Andhra Pradesh General Sales Tax Act, 1957 ("the Act", for short). The goods dealt with by the assessee is mica which is item 6 of the Second Schedule to the Act and as such subjected to tax at the last purchase point. It is not in dispute that the assessee purchases mica within the State of Andhra Pradesh and exports the same. During the assessment years in question the assessee claimed exemption under sub-section (3) of section 5 of the Central Sales Tax Act, 1956 ("the Central Act", for short) read with section 38 of the Act in respect of the turnover relating to its purchases of mica which was exported by it. The Commercial Tax Officer concerned exempted the turnover relating to the purchases of mica made by the assessee within the State after the agreements or orders for or in relation to the export of the same, but rejected the claim for exemption in respect of the turnover relating to the purchases of mica made by the assessee without any agreement or order for or in relation to its export on the ground that such purchases did not satisfy the pre-conditions under section 5(3) of the Central Act and therefore could not be deemed to be in the course of the export of the mica so purchased. The assessee unsuccessfully questioned the said rejection before the Appellate Deputy Commissioner and the Sales Tax Appellate Tribunal.
2. T.R.C. Nos. 52 and 70 of 1989 are preferred against the two separate orders of the Appellate Tribunal dated September 29, 1988, rejecting the said claim of the assessee relating to the assessment years 1977-78 and 1976-77 respectively. T.R.C. Nos. 96, 108, 107 and 104 of 1991 are preferred against the common order of the Appellate Tribunal dated September 7, 1990 similarly disposing of the appeals of the assessee relating to the assessment years 1978-79 to 1980-81 and 1982-83 respectively. T.R.C. Nos. 90 and 32 of 1995 relate to the assessment years 1981-82 and 1983-84 respectively and they arise out of appeals which were similarly disposed of by the Appellate Tribunal by a common order dated July 12, 1994. As already stated above, the facts are similar and the question raised in all these relates to the refusal of the authorities below, as confirmed by the Appellate Tribunal, to exempt the turnovers relating to the last purchases of mica by the assessee before the agreement or order for or in relation to their export.
3. On the facts of the present case we do not find any basis for interference with the decision of the Appellate Tribunal. The language of sub-section (3) of section 5 of the Central Act does not permit any other conclusion than that reached by the Appellate Tribunal. The said sub-section is as follows :
"5(3) Notwithstanding anything contained in sub-section (1), the last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of the territory of India shall also be deemed to be in the course of such export, if such last sale or purchase took place after, and was for the purpose of complying with, the agreement or order for or in relation to such export."
4. The assessee does not dispute the fact that the disallowed turnovers relate to the last purchases of mica made by it within the State even before any agreements or orders for export were entered into with the foreign buyers. That is enough to conclude the matter against the assessee. The two requirements of sub-section (3) of section 5 of the Central Act which have to be satisfied for deeming the last sale or purchase of any goods within the State to be in the course of export are (i) that such sale or purchase of the goods should take place after the agreement or order for or in relation to their export and (ii) such sale or purchase should take place for the purpose of complying with such agreement or order. Both the conditions have to be satisfied cumulatively. The agreement or order contemplated is that in respect of which the export of the goods so purchased or sold takes place and that should be with the foreign buyer. Even though the agreement or order with the foreign buyer resulted in the export of the goods in respect of which the last purchase or sale was made, if such last purchase or sale was made before such agreement or order, it cannot be deemed to be in the course of their export. This position is finally settled by the decision of the Supreme Court in Consolidated Coffee Ltd. v. Coffee Board [1980] 46 STC 164. The Supreme Court held as follows in that case :
"......... Section 5(3) ...... has obviously been enacted to extend the exemption from tax liability under the Act not to any kind of penultimate sale but only to such penultimate sale as satisfies the two conditions specified therein, namely, (a) that such penultimate sale must take place (i.e., become complete) after the agreement or order under which the goods are to be exported and (b) it must be for the purpose of complying with such agreement or order and it is only then that such penultimate sale is deemed to be a sale in the course of export."
5. On the question whether the agreement referred to in section 5(3) means only agreement with the foreign buyer or would include any binding or enforceable agreement to export with a local party to implement which penultimate sale should have taken place, the Supreme Court held :
"....... As a matter of pure construction it appears to us clear, therefore, that by necessary implication the expression 'the agreement' occurring in the relevant phrase means or refers to the agreement with a foreign buyer and not an agreement or any agreement with a local party containing the covenant to export."
6. In view of this pronouncement of the Supreme Court, we do not find any substance in the contention advanced by the learned counsel questioning the decision of the Tribunal as regards the turnover in respect of which the assessee's claim is rejected.
7. The learned counsel for the assessee contends that protocol agreements and bilateral trade agreements, etc., between Government of India and the Governments of the countries to which the assessee exported the mica covered by the last purchases made by it within the State, were subsisting when such purchases were made and that the assessee, being a Government of India undertaking and the sole canalising agency for exports of mica, made the said purchases to honour the said agreements. However the learned counsel admits that in ail these cases the actual exports by the assessee were made pursuant to agreements or orders from foreign buyers after the purchases and not pursuant to protocol and bilateral agreements between the Governments. The Appellate Tribunal also found in its orders dated September 29, 1988, as follows :
"It is true that the entire purchases are made by the appellant for purpose of export, but there was no specific agreement with any foreign buyer in pursuance of which these purchases were made. So the appellant is clearly not entitled to claim any exemption under section 5(3)."
8. On the facts found and admitted we do not find therefore any substance in this contention.
9. In T.R.C. Nos. 70 and 52 of 1989 the assessee questioned the finding of the Tribunal upholding the tax on the turnover relating to the last purchase of mica within the State by the assessee which was transferred out of the State to Giridih in Bihar during the two assessment years 1976-77 and 1977-78. The contention of the assessee is that mica was only transferred from this State to Bihar and it continued to be its property. But when that mica goes out of the State the purchases in respect of that mica become the last purchases by the assessee within the State at the close of the relevant assessment years and therefore the said last purchases were attracted to sales tax. It is not the case of the assessee that the said mica taken out of the State was brought back subsequently. Therefore, we do not find any error in the Tribunal upholding the tax on the turnover relating to such last purchases.
10. In the result, the tax revision cases are dismissed. No costs.
11. Petitions dismissed.